LONDON, Oct 9 (Reuters) - Euro zone bond yields were

steady on Wednesday, holding above last week's multi-month lows,

as investors awaited fresh impetus before the European Central

Bank's policy meeting next week where another rate cut is

likely.

ECB rate-setters Francois Villeroy de Galhau and Yannis

Stournaras both indicated that the central bank will likely

lower borrowing costs by another quarter-point when it announces

policy on Thursday, following interest rate cuts in June and

September.

Germany's 10-year yield, the benchmark for the

euro area, was last down less than 1 basis point (bp) at 2.238%.

It hit its lowest level since January at 2.011% last week before

rising on the back of strong U.S. economic data.

Germany's two-year yield, which is sensitive to

changes in interest rate expectations, was down 0.5 bps at

2.225%.

Italy's 10-year yield fell 1 bp to 3.546%,

pushing the spread between Italian and German 10-year yields

to 130 bps.